The U.S. Agriculture Department has stated it will extend for another year a dairy export subsidy program that has been criticized as a protectionist ploy by international competitors.
The program, revived in May after a five-year hiatus, had been set to wrap up by June 30, but Agriculture Secretary Tom Vilsack said world markets remained weak.
“Our international markets continue to erode and the European Union has shown no indication that it will refrain from providing dairy export subsidies,” Vilsack said in a release.
“We will continue to use this program in a responsible manner in support of U.S. dairy farmers,” he said, noting the program is consistent with U.S. commitments to the World Trade Organization.
In January, the European Union revived export subsidies for butter, cheese and skimmed milk powder, which had been suspended since 2007, to help struggling exporters.
In May, the USDA said it would subsidize about 92,000 tons of dairy products headed for world markets after U.S. milk prices plunged by 50 percent from record highs seen in 2007 due to large supplies and weak world demand.
The program pays exporters $850 per ton for qualifying butter exports and $1,050 per ton for products such as anhydrous milkfat, butteroil and ghee.
Of that total, subsidies remain open for more than 48,176 tons of nonfat dry milk, 19,235 tons of butterfat and 2,878 tons of cheese, the USDA said.
The Cairns Group of agricultural exporters have called on both the United States and European Union to stand down from the subsidies, which they said could hurt prices and economic recovery.
WTO members have agreed to eliminate export subsidies by 2013 as part of the Doha round of negotiations, which has not yet concluded.
Source: Reuters